Case:   How Dell Reengineered its Supply Chain <ul><li>Problem : </li></ul><ul><li>Dell  pioneered the mail order approach...
Case:   How Dell Reengineered its Supply Chain  (cont.) <ul><li>Results:   </li></ul><ul><li>In 2001, Dell made over $4 mi...
Lessons from the Case <ul><li>By introducing a new business model , one can change the manner in which business is done. <...
Supply Chain & Value Chain Definitions <ul><li>SUPPLY CHAIN   </li></ul><ul><li>flow of materials, information, payments, ...
Benefits of SCM Contributes to overall increase in profitability & competitive advantage. This positively affects inventor...
Components of Supply Chain
The Supply Chain <ul><li>Involves the life of a product from ‘dirt to dust’. </li></ul><ul><li>Involves movement of tangib...
Supply Chain Problems <ul><li>Problems with the Supply Chain have caused armies to lose wars & companies to go out of busi...
Sources of Supply Chain Problems   <ul><li>UNCERTAINTY </li></ul><ul><li>In demand forecast </li></ul><ul><li>In delivery ...
Other Solutions to SCM Problems <ul><li>During peak times, outsource rather than do-it-yourself. </li></ul><ul><li>“ Buy” ...
COMPUTERIZED SYSTEMS & S.C.M. <ul><li>PHASE 1:   1950s - 60s, the first software programs to support the    supply chain a...
Value Chain Integration <ul><li>“ The process by which multiple enterprises within a shared market channel collaboratively...
Integrating the Supply Chain & Value Chain <ul><li>A Supply Chain transforms into an integrated Value Chain when it….. </l...
Value Chain Integration
Enterprise Resource Planning <ul><li>ERP  = Process of planning & managing all resources & their use in the entire enterpr...
Global Supply Chains <ul><li>Global Supply Chains  = Supply chains that involve suppliers and/or customers in other countr...
How EC contributes to SCM  <ul><li>Digitizes products such as software, which expedites the flow of materials.  </li></ul>...
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Chapters 6

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Chapters 6

  1. 1. Case: How Dell Reengineered its Supply Chain <ul><li>Problem : </li></ul><ul><li>Dell pioneered the mail order approach to selling PCs </li></ul><ul><li>In 1993, Compaq cuts prices to drive Dell out of the market. Dell experiences $65 million in losses. </li></ul><ul><li>Solution : </li></ul><ul><li>Dell implements the following re-engineering strategies: </li></ul><ul><ul><li>mass customization </li></ul></ul><ul><ul><li>just-in-time marketing </li></ul></ul><ul><ul><li>electronic orders & shipments </li></ul></ul><ul><ul><li>e-collaboration with major buyers </li></ul></ul><ul><ul><li>reduction in testing period </li></ul></ul><ul><ul><li>monitoring of productivity & returns on investments </li></ul></ul>
  2. 2. Case: How Dell Reengineered its Supply Chain (cont.) <ul><li>Results: </li></ul><ul><li>In 2001, Dell made over $4 million in computer web sales/ day. </li></ul><ul><li>Becomes leader in Customer Relationship Management (CRM) </li></ul><ul><ul><li>Online tracking of orders & shipments </li></ul></ul><ul><ul><li>Viewer approved configurations and pricing </li></ul></ul><ul><li>Customized home pages for clients. </li></ul><ul><li>Use of Intelligent Agents in production process. </li></ul><ul><li>Increased communication with suppliers. </li></ul><ul><li>By 1999, Dell becomes the number two PC seller and is a leader in management & profitability. </li></ul>
  3. 3. Lessons from the Case <ul><li>By introducing a new business model , one can change the manner in which business is done. </li></ul><ul><li>To implement this model on a large scale, one needs to build superb supply chain management. </li></ul><ul><li>Another major success factor in Dell’s plans was the improvements made in its logistics system along the entire supply chain. </li></ul><ul><li>Improved communications and customer service, which are part of Dell’s CRM program, are the cornerstones of its success. </li></ul>
  4. 4. Supply Chain & Value Chain Definitions <ul><li>SUPPLY CHAIN </li></ul><ul><li>flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses, to the end customers. </li></ul><ul><li>DEMAND CHAIN </li></ul><ul><li> the process of taking orders. </li></ul><ul><li>SUPPLY CHAIN MANAGEMENT (SCM) </li></ul><ul><li> to plan, organize, and coordinate all the supply chain’s activities. </li></ul>
  5. 5. Benefits of SCM Contributes to overall increase in profitability & competitive advantage. This positively affects inventory levels, cycle time, business processes & customer service. Reduces uncertainty & risks in the supply chain.
  6. 6. Components of Supply Chain
  7. 7. The Supply Chain <ul><li>Involves the life of a product from ‘dirt to dust’. </li></ul><ul><li>Involves movement of tangible & intangible inputs. </li></ul><ul><li>Can come in all shapes and sizes and may be fairly complex. </li></ul><ul><li>Can be bi-directional and involve the return of products (reverse logistics) </li></ul><ul><li>The flow of goods, services, information & financial resources must be followed with an increase in value . </li></ul>
  8. 8. Supply Chain Problems <ul><li>Problems with the Supply Chain have caused armies to lose wars & companies to go out of business, for example … </li></ul>In 1999 ToysRUS had problems supplying to holiday shoppers & lost business. In WWII, Germany encountered problems supplying troops in Russia, which contributed to their collapse.
  9. 9. Sources of Supply Chain Problems <ul><li>UNCERTAINTY </li></ul><ul><li>In demand forecast </li></ul><ul><li>In delivery times & </li></ul><ul><li>production delays </li></ul><ul><li>POOR COORDINATION </li></ul><ul><li>With Internal units and </li></ul><ul><li>business partners </li></ul><ul><li>Ineffective customer </li></ul><ul><li>service </li></ul><ul><li>High inventory costs, loss of revenue & extra cost for expediting services. </li></ul>
  10. 10. Other Solutions to SCM Problems <ul><li>During peak times, outsource rather than do-it-yourself. </li></ul><ul><li>“ Buy” rather than “make” production inputs when appropriate. </li></ul><ul><li>Configure optimal shipping plans. </li></ul><ul><li>Create strategic partnerships with suppliers. </li></ul><ul><li>Use the just-in-time approach to purchasing. </li></ul><ul><li>Reduce the lead time for buying and selling. </li></ul><ul><li>Use fewer suppliers. </li></ul><ul><li>I mprove supplier-buyer relationships. </li></ul><ul><li>Manufacture only after orders are in. </li></ul><ul><li>Achieve accurate demand by working closely with suppliers . </li></ul>
  11. 11. COMPUTERIZED SYSTEMS & S.C.M. <ul><li>PHASE 1: 1950s - 60s, the first software programs to support the supply chain arrive. </li></ul><ul><li>PHASE 2: Development of the Material Requirement Protocol (MRP). </li></ul><ul><li>PHASE 3 : Enhanced MRP known as Material Resource Planning become available. </li></ul><ul><li>PHASE 4 : Enterprise Resource Planning (ERP) integrates transaction processing activities. </li></ul><ul><li>PHASE 5 : Extended ERP/SCM software. </li></ul>
  12. 12. Value Chain Integration <ul><li>“ The process by which multiple enterprises within a shared market channel collaboratively plan, implement, and manage (electronically as well as physically) the flow of goods, services, and information along the entire chain in a manner that increases customer-perceived value.“ </li></ul>
  13. 13. Integrating the Supply Chain & Value Chain <ul><li>A Supply Chain transforms into an integrated Value Chain when it….. </li></ul><ul><ul><li>Extends the chain all the way from sub-suppliers to customers. </li></ul></ul><ul><ul><li>Integrates the back-office operations with those of the front office. </li></ul></ul><ul><ul><li>Becomes highly customer-centric, focusing on demand generation and customer service. </li></ul></ul><ul><ul><li>Is proactively designed by chain members to compete as an “extended enterprise”. </li></ul></ul><ul><ul><li>Seeks to optimize the value added by information and utility-enhancing services. </li></ul></ul>
  14. 14. Value Chain Integration
  15. 15. Enterprise Resource Planning <ul><li>ERP = Process of planning & managing all resources & their use in the entire enterprise. </li></ul><ul><li>Leading ERP software producers </li></ul><ul><li>SAP, Oracle, J.D. Edwards, Computer Associates, People Soft </li></ul><ul><li>MAIN OBJECTIVE of ERP </li></ul><ul><li>  </li></ul><ul><li>to integrate all departments & functions across a company onto a single computer system. </li></ul>
  16. 16. Global Supply Chains <ul><li>Global Supply Chains = Supply chains that involve suppliers and/or customers in other countries. </li></ul><ul><li>Some of the issues involved in global supply chains; </li></ul><ul><ul><li>legal issues, customs fees and taxes </li></ul></ul><ul><ul><li>language and cultural differences </li></ul></ul><ul><ul><li>fast changes in currency exchange rates </li></ul></ul><ul><ul><li>political instabilities. </li></ul></ul>
  17. 17. How EC contributes to SCM <ul><li>Digitizes products such as software, which expedites the flow of materials. </li></ul><ul><li>Replaces all paper documents with electronic documents. </li></ul><ul><li>Replaces faxes, phone & telegrams with electronic messaging system. </li></ul><ul><li>Enhances collaboration & information sharing. </li></ul><ul><li>Change the nature and structure of the supply chain from linear to a hub. </li></ul><ul><li>Results in shorter supply chain and minimum inventories. </li></ul><ul><li>Facilitates customer service. </li></ul><ul><li>Introduces efficiencies in buying & selling through the creation of e-marketplaces. </li></ul>

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